JEDDAH, 17 December 2005 — Makkah is witnessing a construction boom, and in their eagerness to be part of this, investors are rushing into buying shares and plots of land in projects that have not yet been licensed. Among these projects is the Jabal Khandama real estate project located near the Grand Mosque. The developer recently announced that the first phase of the project would be launched soon with 85 plots of land auctioned on Dec. 21. The Makkah Development Authority, however, told Arab News that the project developer still needs to complete various administrative and technical requirements before being issued a license.
Jabal Khandama project is one of the six major development projects in Makkah launched by Custodian of Two Holy Mosques King Abdullah last November when he was crown prince. The projects, including expansion of the mosque’s northern courtyard and construction of residential towers, aim at providing additional housing and prayer facilities. The projects are also meant to develop areas in the central region of the city after demolishing old and dilapidated buildings. The total area to be developed is estimated at 587,250 square meters, with 90 percent of that being old buildings.
One of the largest of these projects is the SR12 billion Jabal Omar residential towers overlooking the Holy Haram. Spread over an area of 230,000 square meters, the project includes five-star hotels, commercial centers and prayer facilities for 200,000 worshippers. Other projects dedicated by the crown prince were: Development of Ajyad General Hospital, which is located close to the mosque, and construction of another road to the Haram parallel to the existing road from the Jeddah-Makkah Expressway. The new projects also cover development of Shamiya, Jabal Khandama and Jabal Al-Kaaba areas around Haram. Analysts have estimated that the new projects will attract more than SR50 billion in investments. There are other development projects that are still under study by the Makkah Development Authority and have not been issued licenses.
Jabal Khandama project alone is expected to attract investments worth more than SR6 billion. The Jabal Khandama area is located southeast of Haram. It is a hilly rugged area. Although the area is very close to Haram, few people live there. The Makkah Development Authority plans to establish housing facilities for 24,000 people in the area. According to Dr. Sami Barhameen, secretary general of Makkah Development Authority, the project consists of two sections, one is owned by deeds and the other is owned by those adjacent to the project and will be dealt with in accordance with organizational mechanisms to be set by MDA.
“The Makkah Development Authority supervises the project and adopt the organizational studies of the project,” he said to Arab News. “Issuing a license for the project requires the completion of some administrative and technical work by the developer,” he added.
While these projects are meant to develop the central area of Makkah surrounding the Holy Mosque and to improve the economic standards of the residents of those areas, some problems have arisen before they begin to see the benefits. According to one of the residents of Jabal Omar, they were deceived by the developer into selling their property for a much lower price before the official launching of the project. “A year before the official launching of the project, representatives of the developer visited each resident and told us that there would be a government project here and they were the only company authorized to implement it. They didn’t tell us that it was an investment project and we had the option not to sell and buy shares in the company instead. They said that if we didn’t sell, we would lose our land. They kept after us and convinced us to sell for SR60,000 per square meter and then we found out that the MDA had valued the plots at SR200,000 per square meter. We filed lawsuits and the court found that we had been tricked. Since then the developers have settled cases with the residents reluctantly and continually postponing the court hearings, but even their offers of compensation are less than what was offered to Jabal Khandama residents despite that site being further away from Haram,” he said.
Efforts are under way to establish a joint stock firm called Jabal Omar Development Company to implement the project. The company will have a capital of SR3.5 billion including SR1.1 billion as shares of real estate owners in the area. Part of its shares worth SR850 million will be floated for public subscription. Newspaper reports said that some of the company’s shares are already being sold on the black market even though the company does not yet officially exist.